Azure Kubernetes Service (AKS0 was been there for a long time. AKS is the managed Kubernetes offering from Azure to host containerized applications. You can learn more about AKS from here.
Now Azure supports running Generation 2 VMs. Therefore we can take advantage of using more secure and improved performance VMs for AKS clusters.
AKS team has enabled the preview of AKS support for Gen 2 VMs. This feature is still on preview and not recommended for production usage.
Now lets see how we can use generation 2 VMs for AKS.
First we need make sure the aks-preview CLI option is installed. Then enable the feature Gen2VMPreview through Azure CLI.
az feature register --name Gen2VMPreview --namespace Microsoft.ContainerService

Next will create a new resource group

Create AKS cluster using Gen2 VMs.
az aks create --name aksgen2vmcluster --resource-group aksgen2vms -s Standard_D2s_v3 --aks-custom-headers usegen2vm=true
To create cluster it will take 10-15 min after cluster creation we can verify the VMs are used with Gen 2 as follows.

az aks list --resource-group aksgen2vms agentPoolProfiles": [ { "availabilityZones": null, "count": 3, "enableAutoScaling": null, "enableNodePublicIp": false, "maxCount": null, "maxPods": 110, "minCount": null, "mode": "System", "name": "nodepool1", "nodeImageVersion": "AKSUbuntu-1804gen2-2020.11.11", "nodeLabels": {}, "nodeTaints": null, "orchestratorVersion": "1.18.10", "osDiskSizeGb": 128, "osDiskType": "Managed", "osType": "Linux", "powerState": { "code": "Running"
As you see above the the cluster use the nodeImageVersion as the gen2 VM image. From above output we can verify the cluster VMs are using Gen2 Azure VMs.